Core Viewpoint - Nerdy Inc. has received a notice from the NYSE regarding non-compliance with listing criteria due to its Class A Common Stock closing price being below $1.00 for a consecutive 30 trading-day period. The company plans to take actions to regain compliance, including the possibility of a reverse stock split [1]. Group 1: NYSE Compliance Notice - On March 5, 2026, Nerdy Inc. was notified by the NYSE of non-compliance with continued listing criteria [1]. - The company intends to cure the stock price deficiency within a six-month period by achieving a closing share price of at least $1.00 [1]. - Possible actions to regain compliance include a reverse stock split, subject to stockholder approval by the 2027 annual meeting [1]. Group 2: Financial Position - As of December 31, 2025, Nerdy Inc. reported cash and cash equivalents of $47.9 million, indicating sufficient liquidity to fund its business and growth initiatives [1]. - The notice from the NYSE is not expected to impact the company's ongoing business operations or its reporting requirements with the SEC [1]. Group 3: Recent Financial Performance - In the fourth quarter of 2025, Nerdy Inc. achieved year-over-year revenue growth and positive non-GAAP adjusted EBITDA, exceeding guidance for both metrics [2]. - The company demonstrated significant operating leverage with over 1,400 basis points improvement in non-GAAP adjusted EBITDA margins year-over-year [2].

Core Insights - Nerdy reported fourth-quarter 2025 results that met three key goals: returning to growth, accelerating the shift to an AI-native platform, and achieving positive non-GAAP adjusted EBITDA [2][3] Financial Performance - Revenue for the quarter was $49.1 million, representing a 2% year-over-year increase and exceeding the company's guidance of $45 million to $47 million [3] - This quarter marked the first instance since Q1 2024 where both consumer and institutional segments experienced growth simultaneously [3] - Non-GAAP adjusted EBITDA was positive at $1.3 million, surpassing the guidance range of a $2 million loss to breakeven, and improved by $6.8 million from Q4 2024 [3] Strategic Initiatives - The company rebuilt its platform using an AI-native code base, aiming to combine live tutoring with AI tools to enhance educational outcomes while maintaining the importance of human instruction [4] - The U.S. academic tutoring market is valued at approximately $20 billion annually, with Nerdy currently serving fewer than 40,000 active members [4] Product Development - New product features introduced include hyper-personalized lesson plans, real-time tools for tutors, and outcomes-oriented summaries, which received over 95% positive feedback from parents [5] - In Q4, Nerdy completed the rollout of new learner and expert experiences, with 85% of surveyed customers rating the new platform as "better or the same," leading to an 82% customer satisfaction score [6]

Financial Data and Key Metrics Changes - Fourth quarter revenue was $49.1 million, exceeding guidance and up 2% year-over-year, marking the first quarter since Q1 2024 with simultaneous growth in both consumer and institutional businesses [4][19] - Non-GAAP adjusted EBITDA was positive $1.3 million, significantly improving by $6.8 million from Q4 2024 and beating guidance of -$2 million to break even [4][26] - Active members ended the year at 33.2 thousand, with ARPM reaching $364, a 21% increase year-over-year [21][22] Business Line Data and Key Metrics Changes - Consumer revenue was $41.6 million, a 6% increase year-over-year, representing 85% of total company revenues [19][22] - Institutional revenue was $7.2 million, accounting for 14% of total revenue, with bookings of $4.1 million, down 11% year-over-year due to funding delays [22][24] - Gross margin for Q4 was 66.8%, showing sequential improvement and driven by a shift to higher frequency learning memberships and price increases [23][24] Market Data and Key Metrics Changes - The U.S. academic tutoring market is estimated at approximately $20 billion per year, with the company currently serving fewer than 40,000 active members [6][7] - The demand for high-quality, personalized tutoring remains strong, with approximately 50 million students progressing through the K-12 and higher education systems in the U.S. each year [5][6] Company Strategy and Development Direction - The company aims to enhance personalized learning across its Live+AI platform, leveraging AI to improve user experience and operational efficiency [15][16] - Plans to return to active member growth through new marketing channels and an improved mobile experience are in place [16][17] - The focus for 2026 includes compounding gross margin and structural cost improvements, targeting break-even non-GAAP adjusted EBITDA for the full year [17][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the top-of-funnel trends and the ability to optimize customer acquisition and retention [39][40] - The completion of the new AI-native platform is expected to enhance engagement and operational speed, leading to better customer experiences [36][37] - The company anticipates continued gross margin improvement and operational efficiencies as it leverages AI capabilities [24][30] Other Important Information - The company completed the rollout of new learner and expert user experiences, receiving positive feedback from 85% of surveyed customers [12][22] - Significant reductions in sales and marketing expenses were noted, alongside a 22% year-over-year decline in headcount due to automation [25][26] Q&A Session Summary Question: Impact of new platform on engagement and retention - Management noted that the new platform allows for faster and more flexible operations, leading to improved engagement and retention [34][36] Question: Navigating changes in the search environment - Management expressed optimism about top-of-funnel trends and the ability to optimize discoverability and conversion rates [39][40]

Financial Data and Key Metrics Changes - Fourth quarter revenue was $49.1 million, exceeding guidance and up 2% year-over-year, marking the first quarter since Q1 2024 with simultaneous growth in both consumer and institutional businesses [4][19] - Non-GAAP adjusted EBITDA was positive $1.3 million, significantly improving by $6.8 million from Q4 2024 and beating guidance of -$2 million to break even [4][26] - Active members ended the year at 33.2 thousand, with ARPM reaching $364, a 21% increase year-over-year [21][26] Business Line Data and Key Metrics Changes - Consumer revenue was $41.6 million, a 6% increase year-over-year, representing 85% of total company revenues [19] - Institutional revenue was $7.2 million, accounting for 14% of total revenue, with bookings of $4.1 million, down 11% year-over-year due to funding delays [22][24] - Gross margin for Q4 was 66.8%, showing sequential improvement and driven by a shift to higher frequency learning memberships [23][24] Market Data and Key Metrics Changes - The U.S. academic tutoring market is estimated at approximately $20 billion per year, with the company currently serving fewer than 40,000 active members [6][7] - The demand for high-quality, personalized tutoring remains strong, with approximately 50 million students progressing through the K-12 and higher education systems in the U.S. each year [5][6] Company Strategy and Development Direction - The company aims to enhance personalized learning across its Live+AI platform, focusing on innovation and improving customer experience [15][16] - Plans to return to active member growth through new marketing channels and an improved mobile experience [16][17] - Targeting break-even non-GAAP adjusted EBITDA for the full year 2026, with expectations for gross margin expansion and cost improvements [17][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the top-of-funnel trends and the ability to optimize customer acquisition and retention [37][38] - The company is optimistic about the impact of the new AI-native platform on engagement and retention, with expectations for improved customer experiences [33][34] - The foundational work of the past year is expected to lead to stronger financial performance in 2026 [15][29] Other Important Information - The company completed the rollout of its new learner and expert user experiences in Q4, receiving positive feedback from customers [12][21] - Significant cost reductions were achieved through headcount reductions and operational efficiencies, with a 22% decline in headcount year-over-year [14][26] Q&A Session Summary Question: Impact of the new platform on engagement and retention - Management noted that the new platform allows for faster and more flexible operations, leading to improved engagement and retention [32][34] Question: Navigating changes in the search environment - Management expressed confidence in top-of-funnel trends and the ability to optimize discoverability and conversion rates [37][38]

Financial Data and Key Metrics Changes - In Q4 2025, the company reported revenue of $49.1 million, exceeding guidance and reflecting a 2% year-over-year increase [4][19] - Non-GAAP adjusted EBITDA was positive $1.3 million, significantly improving by $6.8 million from Q4 2024, and beating guidance of -$2 million to break even [4][26] - Active members reached 33.2 thousand by year-end, with ARPM at $364, a 21% increase year-over-year [20][21] Business Line Data and Key Metrics Changes - Consumer revenue, which accounted for 85% of total revenue, increased by 6% year-over-year to $41.6 million, driven by higher frequency learning memberships and price increases [19][20] - Institutional revenue was $7.2 million, representing 14% of total revenue, but bookings decreased by 11% year-over-year due to funding delays [21] Market Data and Key Metrics Changes - The U.S. academic tutoring market is estimated at approximately $20 billion annually, with the company currently serving fewer than 40,000 active members, indicating significant growth potential [6][9] - The company aims to deepen engagement with learners and improve personalization, leveraging AI capabilities to enhance the learning experience [15][16] Company Strategy and Development Direction - The company is focused on enhancing personalized learning through its Live+AI platform, aiming to return to active member growth and improve customer retention [15][16] - The strategy includes optimizing tutor incentives and expanding marketing efforts to drive awareness and virality [16][17] - The company targets break-even non-GAAP adjusted EBITDA for the full year 2026, with expectations for gross margin expansion [17][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum heading into 2026, highlighting improvements in user experience and operational efficiencies [19][31] - The company anticipates continued revenue growth driven by the new platform and improved customer engagement [15][28] Other Important Information - The company completed the rollout of a new AI-native platform, which is expected to enhance product innovation and customer satisfaction [12][24] - Sales and marketing expenses decreased significantly, reflecting improved efficiency and a strategic shift in investment focus [25] Q&A Session Summary Question: Impact of the new platform on engagement and retention - Management noted that the new platform allows for faster and more flexible operations, leading to improved engagement and retention [33][36] Question: Navigating changes in the search environment - Management reported healthy top-of-funnel trends and improved ability to optimize customer acquisition and retention [38][40]

Employment and Workforce - As of February 12, 2026, the company had approximately 500 full and part-time employees and 200 independent contractors[64]. - The company offers competitive compensation and benefits packages to retain and develop its employees, including free classes and tutoring on its Live Learning Platform[65]. - The company has agreements with approximately 200 globally-sourced independent contractors primarily used in customer support, tutor operations, and engineering roles[64]. Financial Obligations - The company had outstanding principal indebtedness of $20,000 thousand related to borrowings under a Term Loan with a weighted-average variable interest rate of 10.75% as of December 31, 2025[307]. - A hypothetical 100 basis point change in interest rates would have had an immaterial impact on interest expense and interest paid on variable rate debt during the year ended December 31, 2025[307]. Market Awareness and Adoption - The company has scaled to millions of users with access to its platform, but many potential learners and institutions in the U.S. remain unaware of its online solutions[62]. - The company believes that consumer awareness is a primary barrier to the adoption of its online solutions, and it will continue to drive awareness of its platform[62]. - The company believes that its online platform is more efficient, convenient, effective, and affordable compared to offline learning solutions, which is a key factor in driving consumer adoption[61]. Regulatory and Legal Matters - The company is subject to various regulatory and administrative investigations, which could have a material impact on its business and financial condition[66]. - The company has ongoing trademark and service mark registration programs to protect its intellectual property rights, with several registered and pending trademarks in the U.S. and foreign jurisdictions[75].

Revenue Performance - Revenue for Q4 2025 was $49.1 million, exceeding guidance and up 2% year-over-year, marking the first simultaneous growth in both Consumer and Institutional segments since Q1 2024[4] - Revenue for Q4 2025 was $49.1 million, a 2% increase from $48.0 million in Q4 2024, while full-year revenue decreased by 6% to $179.0 million from $190.2 million in 2024[40] - The company expects Q1 2026 revenue to be in the range of $46-$48 million and full-year 2026 revenue to be between $180-$190 million[39] - Consumer revenue for the year ended December 31, 2025 was $150,736 million, a decrease of 2% compared to $154,230 million in 2024[67] - Institutional revenue for the year ended December 31, 2025 was $27,607 million, down 22% from $35,277 million in 2024[67] Membership and Customer Metrics - Active Members reached 33.2 thousand by the end of 2025, with Average Revenue per Member per Month (ARPM) increasing by 21% year-over-year to $364[12][26] - Active Members decreased to 33.2 million, a year-over-year decline of 11%[92] - Average Revenue Per Member (ARPM) increased to $364, reflecting a 21% year-over-year growth[92] - Active Experts decreased during the year ended December 31, 2025, primarily due to lower utilization in the Institutional business and changes in Expert incentives[90] - Active Experts declined to 9.1 thousand, down 15% compared to the previous year[92] Financial Performance - Non-GAAP adjusted EBITDA was positive $1.3 million in Q4 2025, improving by $6.8 million compared to Q4 2024, with a margin expansion of over 1,400 basis points year-over-year[16][31] - Non-GAAP adjusted EBITDA for Q4 2025 was positive $1.3 million, exceeding guidance of negative $2.0 million to breakeven, compared to a loss of $5.5 million in Q4 2024[56] - The company reported a net loss of $14.0 million for Q4 2025, an improvement from a net loss of $15.7 million in Q4 2024[55] - The company reported a net loss of $60,948 million for the year ended December 31, 2025, an improvement from a net loss of $67,142 million in 2024[71] - Non-GAAP Adjusted Net Loss for the year ended December 31, 2025 was $(24,736) million, compared to $(26,053) million in 2024[83] Cost Management - Sales and marketing expenses for Q4 2025 were $14.2 million, down from $18.4 million in Q4 2024, reflecting improved marketing efficiency[49] - General and administrative expenses for Q4 2025 were $24.7 million, a decrease of $5.2 million from $29.9 million in Q4 2024[52] Market and Growth Potential - The U.S. academic tutoring market is estimated at $20 billion, with the company currently serving fewer than 40,000 Active Members, indicating significant growth potential[8] - The company aims for breakeven non-GAAP adjusted EBITDA for the full year 2026, representing an improvement of over 1,000 basis points compared to 2025[22] - The company expects to end 2026 with $40-45 million in cash, ensuring ample liquidity for growth initiatives[38] Customer Experience and Product Development - The rollout of the new AI-native platform has received an 82% customer satisfaction score, with 85% of surveyed active customers rating the new experience as better or the same[15] - The company anticipates continued gross margin improvement into 2026 due to a shift towards higher frequency and higher-priced Learning Memberships[48] Financial Position - Total assets decreased to $76,166 million as of December 31, 2025, down from $92,507 million in 2024[69] - Total liabilities increased to $47,233 million as of December 31, 2025, compared to $31,394 million in 2024[69] - The company had cash and cash equivalents of $47.9 million as of December 31, 2025, providing ample liquidity for growth initiatives[60] Forward-Looking Statements and Risks - Forward-looking statements indicate expectations for revenue growth and enhancements in the Learning Membership experience[104] - The company acknowledges risks that could cause actual results to differ materially from forward-looking statements, including customer acquisition and retention challenges[106] - Management uses non-GAAP financial measures for planning and evaluating strategic initiatives[101] - The company has a history of net losses and negative operating cash flows, which may require alternative sources of liquidity[106]

Summary of Nerdy Conference Call Company Overview - **Company**: Nerdy, operating under the consumer-facing name Varsity Tutors, is a leading platform for live learning in the United States, connecting users with experts across 3,000 subjects through a vertically integrated marketplace model [4][10]. Go-to-Market Strategy - **Consumer Model**: Direct-to-consumer internet model focusing on parents purchasing tutoring for their children based on significant educational goals [5][10]. - **Institutional Model**: Direct engagement with school districts and institutions, providing tools for data-driven interventions and personalized learning experiences [8][10]. Revenue Breakdown - **Revenue Composition**: Consumer business accounts for 85% of total revenue, while institutional business represents 15% [10]. - **Active Families**: Approximately 35,000 active families as of Q3, with an average monthly payment of $375 for tutoring services [10]. AI Integration - **AI Utilization**: AI is central to enhancing the learning experience, allowing for personalized and bespoke educational journeys. The company has transitioned to AI-native services, improving customization and operational efficiency [11][12][15][20]. - **Impact on Experience**: The integration of AI enables real-time lesson preparation, personalized content delivery, and improved tutor-student interactions [16][17]. Market Trends and Opportunities - **Consumer Expectations**: Rising expectations for personalization in education driven by AI advancements [27][28]. - **Institutional Market**: Increased openness to AI in education, with a focus on high-dosage tutoring to address learning gaps [31][33][35]. Financial Performance - **Revenue Growth**: Sequential improvement in revenue growth rates throughout 2025, with expectations for continued acceleration into 2026 [22][23]. - **Gross Margins**: Significant improvements in gross margins due to strategic investments in tutor compensation and technology enhancements [39][40]. - **Operating Efficiency**: Adjusted EBITDA margin improved by 960 basis points year-over-year, driven by operational efficiencies and cost reductions [41][42]. Leadership and Strategy - **New Leadership**: Introduction of a new COO and operational team focused on enhancing efficiency and customer experience [45]. - **Balance of Growth and Profitability**: The company aims to be more aggressive in growth while maintaining profitability through scalable systems and improved operational discipline [43][44]. Investment and Financial Flexibility - **Term Loan Agreement**: A recent term loan enhances financial flexibility, allowing for offensive growth strategies and potential M&A opportunities [48][49]. - **Stock Purchases**: CEO Chuck Cohn has invested over $80 million in stock purchases, indicating strong confidence in the company's future [55]. Future Outlook - **Catalysts for Growth**: Investors should focus on revenue acceleration, operating leverage, and the impact of AI on product offerings as key indicators of success [57][59]. - **Product Quality**: Anticipated improvements in product quality and execution pace are expected to drive future growth [66]. This summary encapsulates the key points discussed during the conference call, highlighting Nerdy's strategic direction, financial performance, and market opportunities.

Core Insights - The U.S. education market is transitioning from traditional methods to digital and career-focused programs, driven by student demand and government initiatives [2][11] - The Zacks Schools industry shows resilience, with median share prices above the S&P 500 composite, indicating promising mid to long-term prospects despite current stock performance [3] - Five education stocks are identified with expected earnings growth of over 10% year-over-year by 2026, including Chegg, Adtalem Global Education, Grand Canyon Education, Nerdy, and Legacy Education [4] Market Trends - The shift towards hybrid and AI-based learning models is gaining traction, with education companies adapting to meet the demand for flexible learning formats [5][8] - Companies like Chegg and Nerdy are benefiting from the rise of online and hybrid learning, leveraging AI-enhanced tools and subscription-based digital offerings [6][8] - The focus on career-oriented programs is increasing, particularly in high-demand fields like healthcare, aligning with workforce needs and supporting enrollment growth [9][10] Government Support - Federal and state initiatives are promoting EdTech adoption and workforce development, enhancing the prospects for education companies [11] - New interagency agreements aim to streamline program delivery and reduce administrative burdens, while a national policy established in April 2025 focuses on advancing AI education [11][12] Stock Performance - Chegg (CHGG) has a Zacks Rank of 1, with a projected earnings growth of 228.6% for 2026 despite a year-to-date drop of 42.9% [16] - Adtalem (ATGE) holds a Zacks Rank of 2, with a fiscal 2026 EPS estimate of $7.85 and expected growth of 17.7% [17] - Grand Canyon Education (LOPE) has a Zacks Rank of 2, with a projected earnings growth of 11.2% for 2026 [18] - Nerdy (NRDY) carries a Zacks Rank of 2, with an expected growth of 35.9% for 2026 despite a year-to-date decline of 16.7% [19] - Legacy Education (LGCY) also holds a Zacks Rank of 2, with a projected earnings growth of 11.9% for 2026 and a year-to-date gain of 23.8% [20]

Core Insights - The Zacks Schools industry is experiencing a recovery driven by increased demand for applied and career-oriented education, particularly in healthcare, skilled trades, cybersecurity, and IT [1][5] - Technology is becoming a significant competitive advantage, with institutions investing in adaptive learning systems and online platforms to enhance student engagement and operational efficiency [2][8] - The industry is consolidating, with larger providers acquiring smaller institutions to expand offerings and improve operational leverage [6] Industry Overview - The Zacks Schools industry includes for-profit education companies offering various programs in finance, healthcare, technology, and skilled trades, focusing on career-oriented education [4] - The sector is addressing the shortage of healthcare professionals through intensive training models linked to industry needs [1][5] Trends Influencing Growth - There is a rising demand for workforce-oriented programs, particularly among adult learners and career switchers, as the labor market increasingly values job-ready skills [5] - Government initiatives supporting vocational education and non-degree pathways are contributing to the growth outlook [3][5] Financial Performance and Valuation - The Zacks Schools industry has a Zacks Industry Rank of 65, placing it in the top 27% of over 250 Zacks industries, indicating positive near-term prospects [11][12] - The industry's forward 12-month price-to-earnings ratio is currently at 12.58X, significantly lower than the S&P 500's 23.57X, suggesting potential undervaluation [18] Key Companies and Their Prospects - **McGraw Hill**: Experiencing growth from digital and subscription models, with a projected fiscal 2026 earnings of $1.63 per share on $2.05 billion in revenues, reflecting a 300% surprise in the last quarter [21][24] - **Grand Canyon Education**: Focused on scalable online expansion and healthcare programs, with expected earnings growth of 12.9% and 11.2% for 2025 and 2026, respectively [27][28] - **Perdoceo Education**: Benefiting from rising student interest and expanding program offerings, with expected earnings growth of 11.4% and 9% for 2025 and 2026 [31][32] - **Adtalem**: Gaining from enrollment momentum and strategic partnerships, with projected earnings growth of 17.7% and 13.7% for fiscal 2026 and 2027 [35][37] - **Nerdy**: Enhancing its platform with AI integration, with improvements in earnings estimates for 2025 and 2026, indicating a potential investment opportunity [39][40]